-Social:
Coffee is flourishing in Asia where coffee shops became a place for friends to gather for social events than for coffee itself. Unlike many Western countries, Asians prefer light sweet coffee taste for instance thirty percent of Asians who buy ready-to-drink prefer cappuccino, mocha is preferred by quarter of coffee drinkers at coffee shops while 17 percent prefer Regular coffee .by tradition, Asian people preferred tea, but the existence of coffee shops in Asia like Starbucks created a booming coffee culture. Also, the booming coffee culture in Asia has been fueled in part by young urban professionals who have studied in Europe or the United States. Many Asians choose instant coffee at home. Most of the fresh coffee is consumed by the old generations while The young generations typically uses instant- coffees for the benefit of making the person stay alerted. In areas of the Africa, Middle East, and South America , coffee is like cigarette, where people drinks it while socializing or doing other things,, rather than a form of entertainment .
-Technology:
Technology has improved massively over the years and it has dramatically affected caribou coffee. By introducing on line shopping and ways of brewing coffee beans through their caribou website. Also technology played a great role in the atmosphere of caribou‟s coffee house through providing customers with digital media and free access to wi-fi.all this lead to a great experience for customers and a sustaining competitive advantage.
-Environment:
The widespread of the coffee industry has led to the destruction of rainforests to make space for cultivating coffee, this in turn impact the migrations and feedings pattern of local wildlife such as songbirds, as well as food sources for non-farmers. Rainforest Alliance aims to cover all aspects of sustainable agriculture: environment, rights and welfare of workers and the interests of local communities. It does not prohibit use of agrochemicals but requires integrated pest management. It
also requires the maintenance of Shade cover and/or the restoration of native forest reserves. Regarding its relation with the suppliers, Caribou coffee has a partnership with rainforest alliance which is part of Caribou‟s responsible coffee beans sourcing.
Coffee is going Organic: Organic is a term defined by law in many countries like the US and the
European Union (EU).It contains regulations that controls the standards of producing, accrediting, overseeing of certification and labeling of organic foods and drinks,ex. use of nonorganic fertilizers, pesticides and biological pest control methods is limited in the production of organic food and drinks. There is variation in the level and growth of demand forcertified coffee by country and by certification scheme.
-Legal:
Caribou Coffee‟s improved lighting design is lined up with its obligation to social
responsibility and environmental sustainability. Caribou Coffee adopted energy efficiency by using compacted fluorescent lamps in its lighting design arrangements for corporate-owned locations. The program is expected to save each coffeehouse up to 70% in lighting costs.
4. Porter’s five forces:
-Threats of new entrants:
The coffeehouse industry is characterized by intense competition not only from the industry leader, but also from the threat of new entrants attracted by huge growth. Entry barriers related to experiences in the industry are low. In specialty coffee the learning curve is typically limited to business methods, as opposed to product design. Even much of the businesses methods information can be imitated from other retail industries. Selecting experienced franchisees in their regions would essentially outsource expertise to reduce the demands on the central company.
-Bargaining power of customers:
The buyer power is very high because there are many choices and the switching costs for going from one
coffee house to another are so low. Creating a good quality beverage is based upon the materials used .The out-of-home consumption of coffee gained an increasing popularity sustaining the role of the café culture and the emergence of global café chains like Starbucks.
-Bargaining power of suppliers: Bargaining power of suppliers are becoming high due to the fact
that many consumers are now facing a growing complexity of ethical and environmental claims in coffee and there is concern about confusion and lowering of standards. It is also possible that certification may become another requirement for suppliers‟ market access and a barrier for small producers. In this case, certification may be an advantage for large coffee estate producers and irrelevant for the majority of small coffee farmers.
-Rivalry:
It is apparent that in the coffee industry there is enormous rivalry among competitors, which is why Caribou must maintain its differentiation to maintain their customer‟s loyalty. The main axes of
differentiation are location, quality, products, atmosphere, and taste. One way to compete with the brand names currently in existence is to create brand loyalty. This can be done by ensuring quality
-Substitutes:
The market for substitutes is split between in-store and out-of-store points-of-sale. It is likely that by selling beans in-store for at-home coffee-making, the entrant may better encompass the consumers‟ coffee experience and so build a better name overall. Teas also enhance the reputation, and are relatively simple to incorporate into the store atmosphere and design.Low-end coffee sellers like Dunkin Donuts are weaker substitutes, and proper differentiation in quality and atmosphere is necessary to avoid too much overlap with them. Other non-coffee substitutes, such as colas, energy
drinks, or other specialty beverages are not easily compatible with the specialty-coffee model.
5.Caribou coffee generic strategy:
Caribou follows a differentiation strategy in its retail and commercial segment. They differentiate coffee by origin, connecting a sense of taste to a sense of place like their Africa and costa rica coffee products. Also Through its strategy of attracting young customers, caribou sells coffee as a cold
beverage(ready-to-drink category) in partnership with coca cola company. It also offers packages of whole caribou coffee beans for home brewers in partnership of Keurig.
6. Caribou coffee Value Chain Analysis:
Caribou Coffee‟s dedication to creating a unique experience for customers by combining high quality products, a distinctive coffeehouse environment, and excellent customer service, differentiates their place in the coffeehouse industry. Creating strong human capital is the foundation for this
differentiation strategy. Establishing human capital has enabled Caribou Coffee to create a strong hold between the individual capabilities, skills, knowledge, and experiences of the company‟s employees.
Caribou follows three main interdependent activities of creating human capital: attracting,
developing, and retaining. The most important part of Caribou Coffee‟s human capital was their focus on creating operational excellence through extensive training procedures. The training at Caribou Coffee is important and continuous, as they believe it is the employees that created the great products or customer service that differentiated the company. The training of employees is a key to fulfilling the mission of creating “an experience that makes the day better”. The company implemented this into all of their training practices as one of the company‟s core competencies that would create strong commitment in the employees. All new employees were given instructions to become „drink certified‟, in-store Certified Instructor Trainers provided ongoing instruction in presentation and service, and
courses were offered through Caribou College to improve career skills. The training at Caribou Coffee was very important and extensive, as they believed it is the employees that created the great products and customer service that differentiated the company.
The company also retained their human capital by implementing rewards that are both tangible and
intangible. Caribou Coffee follows a pay-for-performance philosophy that allowed the company to identify and reward team members that met high performance standards. Employees would work harder to make their coffeehouse the best since the bonuses for managers and the coffeehouse was
based on sales, profit, and customer service. Caribou Coffee maintained a sense of social capital that gave employees the chance to want the best for the company by contributing to human capital. Caribou Coffee had an organizational culture that allowed a place “Where Entrepreneurial Spirit Roams Free”.
The company was not overly structured, which is why employees were able to work on a variety of different projects and take on an extensive range of responsibility. Also, Caribou Coffee had a culture that included a strong belief in promoting from within the company, which created a future to work toward for employees. The company was more on the personal or relaxed side where they would communicate in person rather than through emails and they would have a dress code that was business casual.
These different aspects of organizational culture created social capital that gained employee loyalty for Caribou Coffee. Caribou Coffee had a strong belief that customer service was led by their employees and that their selective hiring practices, extensive training, and low turnover
created superior employees.
7.SWOT analysis for caribou coffee:
Based on the previously mentioned internal and external analysis. The analysis shows
Caribou Coffee's Strengths, Weaknesses, Opportunities and Threats.
Strengths:
Having alliances with other strong and popular businesses is a major plus point for Caribou Coffee as it helps bring in new customers and make business more effective. The company is a respected employer that values its customer services through valuing its workforce. The organization has strong ethical values and an ethical mission statement as follows,” 'For us, it's just the right thing to do” The services/products offered by Caribou Coffee are original, meaning many people will return to Caribou Coffee to obtain them. Caribou Coffee‟s marketing strategy has proved to be effective, helping to raise profiles and profits and standing out as a major strength. The lucrative location of Caribou Coffee adds to its strengths due to its accessibility.ex.carbou are having franchising in many places like universities,hospitals..etc.Most recently having a faranchise in one of the biggest US airports,which have many passengers pass through it.This will give many passengers the taste of caribou coffee.
Weaknesses:
Caribou Coffee does not function internationally in many countries. They are just functioning in the middle east and south korea,.this has an effect on success, as they do not reach consumers in overseas markets. A limited customer base is a major weakness for Caribou Coffee as it means they have less people to sell or market to. The challenges that Caribou is facing through the stock declines, company
losses, or even the manager demands for overtime pay can possibly weaken their human capital as a source of competitive advantage.
Opportunities:
Expanding into other markets, Is an opportunity for caribou coffee customer base either geographically or through new products. to expand the Locating away from close substitutes lessens the possibility of consumers making the substitution Looking at export opportunities is a way for Caribou Coffee to reach many customers worldwide selling to them packaged whole bean and grab-and go products through different merchandiser. Forming strategic alliances and franchising is an opportunity for Caribou Coffee to maximize profit and gain new business .Franchising would help caribou in spreading it‟s brand name to a great spectrum (brand awareness).
Threats:
Substitute products available on the market present a major threat to Caribou Coffee. Increased competition from overseas local coffee shops is another threat to Caribou Coffee as it could lead to lack of interest in their products/services.
8.Conclusion and recommendations:
With the industry leader creating new goals that target to make them almost a monopoly in the world of coffee, Caribou is in danger of losing its competitive advantage. This source of social and human capital is a key source of Caribou Coffee‟s competitive advantage, but even that is starting to decline. In order to compete in the industry and even possibly surpass the industry leader Caribou Coffee must have a sustainable competitive advantage. For Caribou to build upon the opportunities it has and avoid threats I suggest the following points:
Caribou has to follow a growth strategy for the commercial segment should continue to build the existing relationships with grocery stores and national office coffee providers and add new points of distribution for our gourmet whole bean and ground coffee. It has to increase brand awareness through marketing efforts and introducing new products and promotions It has to continue to strategically expand their coffeehouse locations in their existing markets It has to open new company-operated coffeehouses and partnering with qualified developers to open franchised coffeehouses while adding select international locations through franchising.
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